Pursuant to subsection 1 of § 48 of the Income Tax Act, employers pay income tax on fringe benefits granted to employees.
Based on clause 7 of subsection 1 of § 2 of the Social Tax Act, social tax is paid on fringe benefits within the meaning of the Income Tax Act, expressed in monetary terms, and on income tax payable on fringe benefits.
Declaration
The period of taxation of fringe benefits is one calendar month. The employer declares the fringe benefits granted to employees and income and social tax calculated on fringe benefits during a calendar month in Annex 4 of the form TSD, which must be submitted together with the form TSD to the Estonian Tax and Customs Board by the 10th day of the month following the calendar month in which the fringe benefit was granted. The tax amount is paid to the bank account of the Tax and Customs Board by the same date at the latest.
Legal basis
Handbook “Fringe benefits”
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Employer’s car is used for transport
If it is impossible to make the journey between home-workplace-home using public transport with a reasonable expenditure of time and money, these rides are considered business-related and are not considered a fringe benefit.
There is no obligation to keep driving records, etc., but the taxpayer must be able to prove and explain in each specific case that the employee's journey to work and home is not considered a fringe benefit. The decision of the board of the company that the company covers the travel expenses of the employees between home and workplace is not a sufficient circumstance for applying the tax exemption.
If the vehicle is not allowed to be used by employees for private rides and the company car is used only for business purposes (including rides to work-home-to work, which are considered business-related), a corresponding notation must be made at the Transport Administration.
Last updated on 08.01.2025
Last updated: 05.11.2025